EMC boss Tucci in lucky escape from poverty EMC boss Joe Tucci has managed to escape poverty by the skin of 8.2 million teeth; he has just cashed in his stock options for a cool $8.2m. The Boston Business Journal notes that Tucci exercised stock option rights and bought 575,000 EMC shares for $12.85 to $13.18 and then, what a wheeze, sold them at once for $27.46 each, …
Joe gets what he can negotiate.
So do the trenchmen.
If the stock holders like it*, I don't see the need for anyone to interfere.
Let the stock holders manage their property and business as they see fit.
*I am aware of rumours of doubtful american law that prevents stock holders from being involved in the remuneration of the board; I think that restriction is wrong.
No, it really is another world.
For us in the trenches, negotiation is rarely an option, even when you are 'indispensable'*.
*And I use the term loosely as 'no one in indispensable'**
**While that is true, there comes a point where losing an employee causes a lot of pain for a business when they discover what that person actually did.
One is on your way in. The other is on your way out, but only if you're really prepared to stay after all.
When I left my last job recently after many years. I was one of those indispensable people on the product I worked on.
The begged and pleaded. Really, it was both sad and hilarious. I'm so much happier with my new job. I could have taken them to the cleaners, but I couldn't stomach the thought of staying.
I was one of those guys in the trenches for seven years.
I had stock options too.
Not 575,000 though.
Personally I thought it would have been better to take just one billion of that, what is it today, eight billion in cash, and give every employee a cash bonus.
Ask Apple how many options SJ has? And what they're doing with their cash hoard.
While it sound straight forward, just taking out of the success story and divide equally up, then that represent a lack of understanding of how companies are build and funded.
Initially, before there is any revenue, there are VC capital, which is somebody pension fund (probably yours) which is being invested into a company in return for stock -- so say, after a number a years the company is succesful, and the company sells, then the investors are all happy, and the VC companies get their money back so that they can return the increased value to the pension funds where it originally came from.... but hold on, we are feeling so generous that we want to take 1/8 of the success and give it out to the employees, just because we like them.
What would you say when you pension fund start writing you saying, we have some good news and some bad news... our investment were really successful, but we chose to give the money back to the companies and their employees, so we canno longer pay your pension... Im sure your not going to be all that happy anymore...
What pension? I've got 401ks and IRAs. (That will give you a clue which side of the pond I'm on.)
And ironically, the companies that manage those funds don't write to me to tell me that they're giving my earnings to the CEOs, they just do it and maybe I find out about it later.
So, tell me, how is giving a lot to one employee better than giving a little to all the employees?
I don't dispute that CEOs should earn more than the guy who empties the trash cans at night, but that isn't what's being discussed.
Even that you are in the US and the 401K gives you some control -- then there iare still people who invest in mutual funds and similar even in the US. Where do you think VC money is coming from? It is made up by such funds, and _yes_ Joe took out his share, but more likely than not, _he_ will re-invest it with some of his VC friends, and then that money goes back into the economy to create new companies and new jobs.
And is new company creation and new jobs not better than for all of us than giving everybody $1000 for their vacation funds, which they will just piss away without any benefit to the overall society anyway.
Joe got his stock options as part of his job negotiations, it was not something that was given to him at random just because is was a good friend with somebody else. If the companies didn't feel that he was worth the stock, then they should not have given it to him in the first place. This is no different that if I hire you for $100,000 per year, and then come back 2 years later and say -- "I didn't think you added that much value over the last 2 year, I want half the money back that I paid you."
The only difference is that you have already spend your salary, and Joe have not -- but if that becomes the criteria, then go and live in communist Russia.
That's a rather naive view of how modern capitalism works. Joe doesn't get his options as part of an open, competitive negotiation with a board of directors that represents the interests of the stockholders. Joe gets his options via a fairly opaque non-competitive negotiation with directors who are only tangentially representative of or responsive to the stockholders.
Most mutual funds don't invest with VCs. Look at the balance sheet of any mutual fund. Pick one, ten, 100 at random. All invested in equities of publicly traded companies.¹
The board of directors negotiate CEOs salary. In EMC's case, the CEO is the CotB too. Hardly what I'd call an arms length negotiation.
And who's to say that same board, looking at a $8B cash hoard, can't decide to reward employees, most of whom haven't had pay raise in three years. They're in control, not the stockholders. Most of the stockholders have given their votes, through a proxy, to the board. The board really is in control.
¹ Oh, there may be a few funds out there that do.
"giving everybody $1000 for their vacation funds, which they will just piss away without any benefit to the overall society anyway."
Purchases with no benefit to society like plane tickets, car rentals, hotel rooms, dining out, tips, drinks, cottage rentals, fishing gear, amusement parks, Disney, canoe/kayak rentals, cameras, water slides, boats, motor home rentals, national park fees, gasoline, camping equipment etc.
If everyone in the company had a say in the CEO's remuneration then maybe such eye watering excess could be acceptable but the simple fact of the matter is that payouts such as this is just the old boy club in action. The board sets the payout and the CEO picks the board and the same group of people move through the revolving doors with a wink wink and nudge nudge to one another.
Joe Tucci has with out any doubt done a very good job but this sort of money is really little more than organized embezzlement at the corporate level and is pretty much the norm in all areas of business though banking and finance are much worse.
I love it when people say you have to pay the best to get the best. Umm no you don't and for some companies they might have been better off with the second or third best.
If Joe had only received $200,000 which is still a major windfall and the remaining $8 million had been given to workers it would have had a much larger effect. If someone is already independently wealthy what is another $8 million to them? But if they had given $10,000 bonus payments to 800 employees the boost that this would have given to moral would have been much more than simply making a rich man richer.
What is all this nonse talk about dividing these things up equally being good for morale.?
Everybody just want a cut once a company is a success, but come and talk to me when it is far uncertain, and let me ask you if you are willing to take a reduced salary for sock options?
If you really want $10,000, then go find a job which actually pays that -- im sure your skills are worth the extra hike -- and I don't mean to be sarky here, there is always a jobs which pays more if you are willing to put the effort into finding it -- the fact that you didn't just show that NOTHING really incentivise you to put in and extra effort into anything.
Actually the *vast majority* of EMC employees DID take a voluntary salary cut when things were not looking good during the GFC. Do a google search. The salaries returned to normal the year after when things started looking better (no stock options were given for this, it was literally a pay cut......but some countries did give out a few days extra holiday in return).
So with a lot of cash in the bank and a bright future EMC should look to divvying up some of the cash internally to help retain talent. EMC is top of the charts in a lot of the segments so competitors love poaching from them - morale and compensation is paramount.
What to spend it on? Stock options? More benefits? Bring the lowest-price-tracking share scheme back? Cash bonus? There's lots of different ways.
Pay was cut, but in the US everyone got an extra week of vacation¹ and many got restricted shares in exchange.
When pay was restored though, no merit increases were given that year (2009) and nothing again in 2010²; 2011 wasn't looking too good either, so I left, and was happy to tell HR about the big increase I was getting at my new job.
¹ If you weren't too busy to take it and/or felt brave enough to take it.
² Except when necessary to retain someone who was threatening to leave.
So you did put the effort into getting a different job -- good for you and congratulation.
They key people should by definition alway be hocked into a company success. Having to negotiate under duress, and threaten to leave to get share options and a better package if you are one of those key people, is alway a sad situation, but sometimes a necessary evil -- however always be prepared that a company will call you bluff and let you go -- sometimes it's better for a company to let a high maintains person go, even if it was a key contributer.
Since you obviously don't get it I'll spell it out for you. In the US we have created a system called "capitalism" which is that in name only. Big government practices real socialism with its buddy big corporations who funnel campaign monies to the politicians. One hand washes the other. Then, both preach "free markets" and "capitalism" to everyone else while they enrich themselves, exempt themselves for the laws/rules/regulations that govern the masses. This system provides rich socialism for those "too big to fail" while small business and individuals live by grubbing "capitalism." It is a rotten, corrupt, immoral system that has allowed a very tiny minority to acquire riches Louis XIV could only dream of.
Wossy.
For all that time we were told that if the BBC didn't pay him 6 MILLION a year he would piss off to ITV and, well, that would be terrible because his immensely talented chat show hosting would ruined by adverts. What's he doing now? Second fiddle to Penn and Teller.
Pretty much the same thing going on at the top of large organisations if you ask me. Everybody convincing themselves that there is only one person who can run things, and the world will end if they don't pay him obscene amounts of money.
In reality, if they gave them a 90% pay cut, they would still be doing extremely well, and if they chose to go off in a huff, where exactly would they go?
Only one word in "Wossy". Oh, and he's third fiddle behind Penn and Teller. It's still more than his lack of talent deserves.
If only the radio bosses would also ditch Steve Wright, Chris Moyles and the Jonathan Ross wankathon at the weekend, the BBC would have even more dosh for making some decent programmes.
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